Seminario 23/06 – Bernardo Batiz-Lazo (Northumbria University) – The introduction of the British debit card at the dawn of the digital economy, 1980s-1990s

Información

Abstract

Debit card payments are the cornerstone of the cashless economy. They exemplify the transfer of monetary balances, enabling on-the-spot transactions through online, real-time, electronic networks. While debit cards were an aspiration in the 1960s, it was during the mid-1970s that the first significant attempts were made to make these aspirations a reality in the USA (Stearns, 2011). These early attempts failed for a variety of reasons. By the late 1980s, however, the concept and technology had advanced enough for British banks to begin coordinating their efforts to develop debit cards. This venture ultimately resulted in the first successful issuance of debit cards in the UK in the late 1980s. The inter-bank collaboration this required, though, was not without its setbacks. One major misadventure was the attempt by Barclays to go at it alone while aiming to replicate the early success it had enjoyed when launching the first bank-backed credit card outside the USA in 1966. This paper investigates the organisational, technological and competitive challenges – and apparent contradictions – related to the launch of a viable debit card in the UK. The research focuses on the motivation and obstacles Barclays faced while trying to sidestep other British banks and confronting the reluctance of large food retailers (particularly Sainsbury´s, the UK’s largest supermarket at the time). Food retailers challenged Barclays and successfully instigated an investigation into Barclays’ strategy by the Office of Fair Trading. Barclays’ initiative to be a single provider, that sought to build and capitalise on “first mover advantage”, would eventually fail. Barclays then joined the shared network set-up by the other large banks. Based on archival sources, this research provides a detailed and nuanced examination of an important step in the construction of financial market infrastructures and the digital economy, specifically cashless retail payment systems. It does so while considering how the growing complexity of these infrastructures became a barrier to entry that required increasing collaboration amongst incumbents.